The Alameda Gap: A Thing of the Past?

The Alameda Gap: A Thing of the Past?

Crypto research firm Kaiko recently mentioned an ‘Alameda Gap’ that has been significantly affecting the Bitcoin and crypto market. This gap was a result of the collapse of the defunct crypto exchange FTX and its sister company Alameda Research, a major market maker providing liquidity to the market. Following Alameda’s collapse, market makers waited on the sidelines for sentiment and trading activity to recover, causing a liquidity gap to persist.

However, according to Kaiko’s latest report, the market has moved past the Alameda Gap. As of last week, the market depth has almost fully recovered and is back to its pre-FTX average. The Bitcoin 2% market depth has increased by 40% year-to-date and briefly exceeded its pre-FTX average of $470 million. This recovery can be attributed to the surge in Bitcoin’s price, which has outpaced market liquidity since the SEC approved Spot Bitcoin ETFs in January.

Bitcoin’s price has risen by approximately 50% year-to-date, reaching new all-time highs such as $73,750 since the beginning of the year. The improvement in liquidity is evident in the declining cost of trading on major US crypto exchanges like Coinbase, Kraken, and Bitstamp. The Bitcoin-to-Gold ratio, measuring the relative performance of both assets, is approaching its all-time high, indicating that Bitcoin is outperforming Gold.

Funds linked to Bitcoin have shown impressive performance compared to Gold. Bitcoin ETFs have attracted $11 billion since their launch in January, while physically-backed Gold ETFs like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) experienced outflows during the same period. This trend suggests that investors may be moving towards Bitcoin as the new global store of value, potentially demonetizing Gold in the process.

Noteworthy figures in the industry, such as Samson Mow, have predicted that Bitcoin will hit $1 million, emphasizing the potential for Gold demonetization in favor of BTC. As Bitcoin continues to gain traction as a valuable asset and store of value, its performance against Gold and traditional financial instruments becomes increasingly significant.

It is important to note that the information provided in this article is for educational purposes only and does not constitute financial advice. Investing in cryptocurrencies and other assets carries inherent risks, and individuals are strongly encouraged to conduct their own research before making investment decisions. The opinions expressed in this article are not representative of NewsBTC, and readers are advised to use the information provided at their own discretion.


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